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Shari’ah Supervision, Corporate Governance and Performance: Conventional vs. Islamic Banks
Stockholm University, Faculty of Social Sciences, Stockholm Business School, Finance.ORCID iD: 0000-0002-6342-8309
Queensland University of Technology, Australia.
2015 (English)In: Journal of Banking and Finance, ISSN 0378-4266, Vol. 58, 418-435 p.Article in journal (Refereed) Published
Abstract [en]

The performance and accountability of boards of directors and effectiveness of governance mechanisms continue to be a matter of concern. Focusing on differences between conventional banks and Islamic banks, we examine the effect of (i) Shari’ah supervision boards, (ii) board structure and (iii) CEO-power on performance during the period 2005-2011. We find Shari’ah supervision boards positively impact on Islamic banks’ performance when they perform a supervisory role, but the impact is negligible when they have only an advisory role. The effect of board structure (board size and board independence) and CEO power (CEO-chair duality and internally recruited CEO) on the performance of Islamic banks is overall negative. Our findings provide support for the positive contribution of Shari’ah supervision boards but also emphasize the need for enforcement and regulatory mechanism for them to be more effective.

Place, publisher, year, edition, pages
2015. Vol. 58, 418-435 p.
Keyword [en]
Shari’ah Supervision, Corporate Governance, Islamic Banks, Boards of Directors, Ethical Banking.
National Category
Research subject
URN: urn:nbn:se:su:diva-119786DOI: 10.1016/j.jbankfin.2015.04.030ISI: 000360510300028ScopusID: 2-s2.0-84934962712OAI: diva2:848231
Jan Wallenders och Tom Hedelius Stiftelse, Handelsbanken (Project ID: P2010-0144: 1).
The Jan Wallander and Tom Hedelius Foundation, P2010-0144: 1
Available from: 2015-08-24 Created: 2015-08-24 Last updated: 2015-10-02Bibliographically approved

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ReferencesLink to record
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